Coworking Continues to Shape the Commercial Real Estate Landscape in Denver
Is commercial real estate coworking for on-demand offices a trendy fad? A similar question could be raised with regards to many industries including high technology cloud computing. The answer to that question would be an unequivocal “no” as it is essentially the platform that all IT services will be delivered in the future. Similarly, coworking or as the industry is now calling it, flexible workspace, has an undeniable appeal and economic benefit for small and large companies alike. Colliers International states that in 2017 flexible workspace accounted for 40% of the commercial activity in some major markets; Denver shares this market statistic.
Some will be surprised to learn that the flexible workspace industry is over 40 years old. It has repositioned itself and shaken off the drab aesthetics of a serviced office similar to what Regus executive suites offer to have become a hotbed of creativity and productivity characterized by compelling design, collaboration, and high-tech networking to boost end-user productivity.
So why is this direction in commercial real estate so strong around the world and in Denver which offers over 1.5 million square feet of flexible workspace?
· It allows member companies to flex with the growth or contraction of their office users
· Members can work in prime real estate locations around the city and now the suburbs
· Shared space improves per square foot cost of real estate by offering economies of scale and increased amenities for the members
· Transportation options tend to be greater based on the operator’s placement in key city corridors
· Technology experience is top-notch and moves the cost of supporting critical infrastructure to the operator
· Collaboration goes beyond the walls of your company and into a broader community of professionals
· Flexible office space memberships sit outside the 2019 Financial Accounting Standards Board(FASB) obligation in which businesses must disclose lease obligations for real estate directly on their balance sheets.
Owners of commercial real estate and the commercial real estate broker community are scrambling to catch up and participate in this economy. Similar to the days where large mainframe purchases supported the revenues of companies like IBM, we are seeing the commercial real estate market move from a monolithic transaction to one of more on-demand transactions. There will be some losers and winners in this market shift as those unable to transform will be overtaken by those more nimble that have embraced a change in their business model. A strong parallel can be drawn with mall operators and the Amazon online marketplace.
“By the mid to late 2020s, the flexible hospitality workplace will be a routine part of our working life,” claims MoreySmith, one of Europe’s leading design and architectural firms. Instead of the heavily patrolled entrance and strictly staff-only feel of today’s offices, the hospitality workplace will mix public and private spaces in a happy, relaxed blend. Workplaces will enter into the sharing economy with many amenities being offered that a company leasing space cannot afford to offer or were not prepared to offer.
So how do companies in Denver’s vibrant and growing work/life community benefit from these trends and utilize these services to impact their bottom line?
· Large companies must include flexible workspaces on their short list of options. Look at moving a portion of your knowledge workers to this type of space. Typically, we have seen creative, finance, technology or product development groups being the first to become members. Your balance sheet will also thank you with fewer debt obligations.
· Midsize size companies can consider larger flexible spaces that can host groups of teams in a single space but also provide that open space working collaborative environment. Benefits include the ability to grow but also contract on demand.
· Small companies should make the move to a flexible workspace as long-term lease obligations do not make sense as they will strip working capital and amenities for employees are superior to what you can offer.
· Commercial brokers need to embrace this change and consult with their clients around all the available option. As with cloud computing, these flexible office services are available direct from the providers, but they are more than happy to work with the commercial experts to provide this service.
As a provider of flexible workspace, I am amazed by the number of different options available in the Denver market. Each workspace offers a different type of experience from the mega providers like WeWorks to the high service, local providers like Venture X, which is supported by a franchise network. Also, the city core is no longer the only place to experience coworking with providers such as Venture X, Thrive and Serendipity offering the same experience in highly walkable work/life suburban neighborhoods.
In conclusion, coworking and flexible workspaces should no longer be viewed as a trendy fad but as the future of a transforming industry. By the late 2020s, the last of the Baby Boomers will be rubbing shoulders with the dominant Millennials and the digitally-native Generation Z in a mix that will mean soundproofed spaces for those whose patience with youthful hubbub is low, and mentor pods to help pass on information from the older to the younger, and vice versa. The shared and flexible workspace is the future and I can see Denver’s progressive community is set to embrace it.
About the Author and Venture X:
Michael Patton is an experienced high-tech entrepreneur and now an owner of a next generation flexible workspace called Venture X on Colorado Blvd and I-25 in Denver. After experiencing multi digit growth in technology that transformed many industries he sees the same transformation occurring in the commercial real estate market. Venture X has been designed to serve the current and next generation of Denver’s workforce. It is a shared workspace and community that blends boutique hotel and modern office styles with a high level of design that feels professional and welcoming.